Correlation Between Appen and Globant SA

Can any of the company-specific risk be diversified away by investing in both Appen and Globant SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Appen and Globant SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Appen Limited and Globant SA, you can compare the effects of market volatilities on Appen and Globant SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Appen with a short position of Globant SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and Globant SA.

Diversification Opportunities for Appen and Globant SA

0.4

Correlation Coefficient

Appen  Globant SA

Very weak diversification

The 3 months correlation between Appen and Globant is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Globant SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globant SA and Appen is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Appen Limited are associated (or correlated) with Globant SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globant SA has no effect on the direction of Appen i.e., Appen and Globant SA go up and down completely randomly.

Pair Corralation between Appen and Globant SA

Assuming the 90 days horizon Appen Limited is expected to generate 3.08 times more return on investment than Globant SA. However, Appen is 3.08 times more volatile than Globant SA. It trades about 0.13 of its potential returns per unit of risk. Globant SA is currently generating about 0.07 per unit of risk. If you would invest  49.00  in Appen Limited on September 14, 2024 and sell it today you would earn a total of  31.00  from holding Appen Limited or generate 63.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Appen Limited  vs.  Globant SA

Appen Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Appen showed solid returns over the last few months and may actually be approaching a breakup point.

Globant SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Appen and Globant SA

The main advantage of trading using opposite Appen and Globant SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, Globant SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Globant SA will offset losses from the drop in Globant SA's long position.

The idea behind Appen Limited and Globant SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.